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Last week the Azerbaijani president, Heidar Aliev, said this second stage would require the Armenians also to give up the Lachin corridor and the town of Shusha, within Karabakh, which before the war had a predominantly Azeri population.
BBC: Karabakh: Are Things Moving?
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Indeed, absent Russian efforts to reduce tensions, Armenia and Azerbaijan would almost certainly have gone to war over Nagorno-Karabakh sometime over the past five or six years.
FORBES: Putin Isn't "Gaining Ground" Regardless of what Amir Taheri Says
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But Armenia gets a lot of its oil and gas from Iran, a vital supplier during its war against the Azeris over Karabakh.
ECONOMIST: The Caucasus
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The country has found it difficult to escape from poverty, partly because of a trade blockade imposed by neighbouring Turkey and Azerbaijan since the 1990s war with Azerbaijan over Nagorno-Karabakh.
BBC: Armenia President Serge Sarkisian wins new term
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Meanwhile, the ten-year ceasefire in the war over the disputed enclave of Nagorno-Karabakh is under strain.
ECONOMIST: The chances of change in Armenia remain small
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The Azeris reckon with some evidence that Russia helped Armenia win the war against them for the disputed Nagorno-Karabakh territory.
ECONOMIST: The Caucasus
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These were sealed in 1993 after Armenia's short war with Azerbaijan over the mainly Armenian enclave of Nagorno-Karabakh.
ECONOMIST: The prime minister looks on a city��s works, and despairs
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In a dramatic shift, Turkey even dropped its long-running precondition that Armenia must withdraw from the territories that it occupied in the 1990s after its war with Azerbaijan over the mainly Armenian enclave of Nagorno-Karabakh.
ECONOMIST: Turkish foreign policy
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Azerbaijan fought a war with neighbouring Armenia in the 1990s, in which it lost the Nagorno-Karabakh region, and the two sides may yet fight another.
ECONOMIST: The two faces of Azerbaijan and its president | The